As the leadership pressures build on the Prime Minister, he is back to his old mould of promising good times around the corner.

This time he sees the housing sector and stock rebuilding as leading the way.

Like Senator Button, who bases his optimism on the number of diners he sees in restaurants as he drives home, it seems to be based on wishful thinking.

The facts are that private dwelling approvals fell further in the March Quarter and are running over 10 per cent below the same period last year.

As the attached chart shows, there is a lag of around six months between changes in trends in approvals and actual expenditures on dwellings.

So even if there is a pick up in dwelling approvals in the June Quarter, it seems unlikely that there will be a strong pick-up in actual expenditure until the December Quarter.

Certainly, there could be some pick up (or at least a slowdown in the rate of rundown) in non-farm non-mining stocks shortly but other stocks, especially some mineral stocks, may actually decline further in the March Quarter.

But this misses the main point. If we are to get a sustained

recovery there will need to be a turnaround in business

investment.

There is no sign of such a recovery and the proposal by Messrs Keating and Kelty to hit the corporate sector with a wage demand which it cannot afford will further demoralise the business sector.

As a result, it seems that our capital stock will grow by only 1 to 2 per cent in 1991/1992 - the lowest on record.

The Prime Minister also fails to mention the continuing problems of the rural sector which is forecast to experience a 60 per cent reduction in real farm cash incomes this year and a further 30 per cent next year.

And this is before taking account of the worrying signs of

drought now developing in some areas of Australia.

Or the worrying slowdown in activity and fall in asset prices now threatening in Japan.

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Or the continuing slowdown in the US, Canada, and the UK (see attached charts).

Or the fact that traditional buyers of our rural commodities, particularly in the USSR and Eastern Europe, are experiencing severe economic difficulties.

It is one thing to try to give hope and encouragement to the

nation that it is possible for us to get out of our present

difficulties through living within our means and boosting those means by working harder.

But it is another to engender false hopes that we can build a sustained and meaningful recovery on housing and stock building.

It is this approach which has landed the country, and the Prime Minister himself, in the current crisis of confidence.

The fact is we are in the middle of a rolling recession and it is likely that some sectors, particularly those that have taken the biggest hit, may look better from time to time.

But a sustained recovery will only eventuate from a concerted effort by governments, business and workers to tackle the fundamental structural reforms needed to make Australia competitive again.